Three popular methods for paying down credit card debt
Whether you used your credit cards too much, or encountered an emergency expense that required the use of your plastic, having a lot of credit card debt can be stressful.
The first thing you need to do when you determine that your debt load is too much is to choose the method you will use to pay it down.
Method No. 1: Snowballing – The first step of the snowball method is to determine how much money you have each month that you can put toward your credit card debt. Next, you will want to organize your debt from the highest to the lowest balance. While making minimum payments toward your other cards, you will want to put as much as you can toward the card with the highest balance. Once this debt has been eliminated, move down to the second highest balance, and repeat the previous steps until all of your credit cards are balance-free.
Method No. 2: The math method – The snowball method might not be for everyone, so you may want to consider the math method. Instead of attacking the debt with the largest balance, this option has you pay down the card with the highest APR, which allows you to cut down on the amount of interest you will be charged while paying down your balances. The math method is best utilized when you believe it will take more than a year to pay off your credit card debt, as an extended period of time with debt can lead to a significant amount of interest being accrued. On the contrary, if all of your interest rates are around the same you may want to seek out another method.
Method No. 3: The psychology method – Those of you who do have similar APRs on all of your credit cards might want to consider the psychology method. This option is the exact opposite of the snowball method, as it has you pay off the smallest debt first and work your way up. While this may not seem like a good idea, paying off an entire card quickly can provide a psychological boost and give your more motivation to pay down more debt. Sometimes eliminating an entire balance is the small boost you need to continue paying off your credit cards.